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tv   Street Signs  CNBC  February 19, 2010 2:00pm-3:00pm EST

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through your report from last may. let's start though with your view of the fed rate hike last night. >> i think, erin, it's pretty consistent with what is now becoming the conventional view out there which is first it doesn't say much about whether interest rates are going to go up. there is no information content about that. but it does tell you that the fed is eager to get out of the emergency tool box. it's eager to normalize both because of internal pressure and because of political pressure so it tells me something about the standing of the fed but it doesn't tell you very much about the next rate hike which we still think is more likely to be next year than this year. >> you're still thinking about that hike in 2011. now let's get to your new normal. we're trying to define, you know, whether people want to say this was a rate of significance or not, it's going to go down on the map as the day rates went up. so you wrote in may a year ago about the quote-unquote new normal. it was a frightening report frankly. i picked out a few quotes. i want to ask if anything has
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changed. you said there's a shock that goes way, way beyond a cyclical flesh wound. you said to be muted growth for up to the next five years and the third bullet point on the screen you saw excessive regulation, highertaxation, and government regulation. it was a pretty damning view. do you still think that these are defining the new normal? >> erin, we see the elements of the new normal coming into place day in and day out. we said a year ago it's going to be a bumpy, multi-year journey to a new normal and the reason is because we were coming off this great age of leverage, this great age of credit entitlement, of light regulation, and the system was going to reset and it wasn't going to reset to the old normal but was going to reset to something else. so my pimco colleagues and i spend a lot of time looking at this and trying to look around this second corner. the first corner was crisis management. the second corner is what would we reset to. and we started coming up with the conclusion that we reset to
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a world that will grow less fast, particularly in the united states, we'll reset to a world where unemployment would be high and remain high which is unusual. and we would reset to a world where the heavy hand of government would be felt. and we've seen that day in and day out. it's like the pieces of a jig saw puzzle slowly coming together to define the new normal and it's going to take another year or two until we see it clearly in terms of the whole thing. but the elements are coming together. >> what rate of unemployment do you think is now the real rate? people used to say anywhere from what, was it three to five or six would be sort of the full employment quote-unquote rate. what do you think the new normal real employment rate should be? >> our sense is the national rate of unemployment will migrate up from the 4, 5, to 7, 8%. our sense is that it is going to take much longer for the actual rate to converge to the natural rate. you'll have both a higher level of unemployment and it's going
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to take longer to converge back. the reason why is a couple. first we've had a massive shock to the system and it takes time for the system to reset. secondly, unfortunately, what's economically desirable today is not politically feasible so you also have an issue of implementation that makes it harder to reset the economy. >> and you also identified in this report that once we settle into this new normal as unpleasant as it may be, there were some things that could make it a whole lot worse. you were worried about protectionist measures being particularly harmful. you talked about the vulnerability of american corporations that they had all the debt to refinance and obviously that was in may. a lot of that got done. you were incredibly worried about further erosion of the autonomy of the fed. by the way, ron paul is coming up. >> yeah. if you ask me today to order these, a year later, i would tell you the one that's gone wide is the erosion in the financial integrity of both private and public sector institutions. there is a lot less trust in the
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institutions today and that's an issue because ultimately advanced economies are advanced because the institutions are strong. i would put that as number one. number two is the growing tensions that we see between the nexus of the global economy, the u.s. and china. and we've got to keep an eye on that. then i would slip to number three, the ability of companies to refinance themselves because we've seen a lot of refinancing. and that's a very positive thing. >> all right. so one thing is good. the other is not so much. last but not least, then, what is your best idea for investors in this new normal? >> you know, the critical thing, erin, for everybody to recognize, whether you are running an investment portfolio or a business is that there are lots of unknowns there. what we call the known unknowns let alone the unknown unknowns. there are lots of known unknowns. and you've got to scale your positions, take into account the fact that there are these known unknowns. similarly, in business it is
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very difficult to navigate a business through a paradigm shift. there's lots of successful companies that haven't navigated paradigm shifts. it is very important to keep an open mind, to do what bill has done here for 30 years which is hard wire in the institution second guessing all the time. questioning about what next? what next? you know, this is going to be a bumpy time and you've got to retain optionalitiy both in the investment portfolios and in the business you run in order to navigate this well. >> thank you very much. we appreciate your time. the man who first wrote that report on what the new normal looks like. as you can see it doesn't look so pretty. by the way, he talked about the fed and how that's his biggest concern. about 1/3 of americans according to the latest cnbc survey don't trust the fed and we have a conversation on that coming up in particular with mr. paul who will be very vocal on the issue. the fed says the rate move is symbolic, that we're talking about as the spark of the new normal, but it is the first shot
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of big change. "street signs" the fed show is going to be tackling it. today we have the best minds to talk about this question. now that the training wheels are coming off what is the new normal for america. we've got the three best people we could, and i want to start off with your report, jim. i really liked this. can you handle the truth, the federal reserve tightened last night. this isn't just some little thing to kind of brush off everyone knew about it, who cares, right? >> that's right. it's a technical adjustment, everybody knew, it was coming, but the fact is the fed tightened yesterday. when we draw charts of stock prices and we want to put little marks on when the fed tightened there is going to be a mark on february 18th because it was a tightening. that doesn't mean the fed is tight. they still have a way to go before they get tight but it began yesterday. >> it began yesterday. and i like your point. i'm surprised no one laughed. it doesn't mean the fed is
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tight. we're far from getting there. >> yeah. >> ken, what changed last night? >> well, i think it's a continuation of the progression to taking off a lot of the excessive ease that, conditions that we've been under. you see the kwan tate if easing coming to an end here. you see a lot of these lending programs coming to an end. and i think one of the things that also that you're seeing is the change in the discount rate. and ultimately we'll see a more of a normalization in the fed funds with where it should be with an economy growing 2% to 3%. >> how do you feel? do you feel good the fed is starting to feel it can go back to normal? >> erin, i'm glad you're here. you got three fixed income guys, and then you got an equity person. >> i had to put one token guy in. you're the guy. >> i'm delighted you're dealing with minorities today on this
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program. the answer is the fed wrote this great speech by bernanke, published on february 10th, and he said he's going to do it. you have to be from mars not to know that he had to deal with the discount rate. but the federal funds rate what bernanke is also saying is not going to be a good, as it was historically, measure of what's going on in the short-term monetary markets. we do the same thing all the time. one of the risks, one of the returns are inflation, interest rates, cost of capital, and equities. and so we have the rice syndrome so to speak. what he said about the new normal is what we've been living through for the last hundred years. returns of 4.5%, 5%. >> wait a minute. last ten years were a little different than that. but so were the '80s and '90s. >> yes. >> you had 18% type returns, compound annual growth rate in the equity markets, so the last ten years you didn't make any money. if you bought an index fund like vanguard you would have made no
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money. >> why did i have you on the show? i want to go back to jim. i started investing ten years ago and actually bought a vanguard fund. ken, it wasn't yours and it was an index fund. >> he made money. fixed income made money. >> but stocks didn't and i put my first money in a stock. nobody's fault but mine. jim, let's just say this is the first shot heard around the world, whether it was telegrafd or not we all know what's coming next because it is telegraphed but that doesn't mean we know what it means. that's of course fed is going to stop buying mortgages next month. what does it mean for the rate that matters most to most americans, the mortgage rate? >> i think it means mortgage rates are going to go up. the fed bought a trillion dollars worth of mortgages in the last year. that's allowed the fixed income world, us other three guys, to buy a trillion dollars of everything else. well, now when the fed stops, money is going to have to be allocated back towards the mortgage market or those rates are going to go up substantially which means that capital is going to go down. the fed has been printing money. they'll stop printing money. when they do, rates go up. the only thing that will change
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that fs the economy were to seriously decelerate and treasury yields would go down and mortgages follow. short of that i think it means rates going up and the only question is how much. >> ken, you have a sense of how much? >> yeah. we think that spreads between the mortgages and treasuries will probably widen about 25 basis points, maybe up to 50 basis points. but the whole -- you know, the fact that there's not that much -- there is not the government buying in the bond markets in general is probably going to cause just general interest rates, treasury rates to go up as well, because that demand was a big part of keeping overall interest rates lower. >> how is that a good thing for you? >> well, basically if inflation is going to run a little bit, 1% or 2% or whatever and on the ten-year basis a little higher than that, what's wrong with short-term interest rates being at 2% or 3%? >> if the mortgage rate goes up and people with adjustable rate mortgages are paying more -- >> erin, you bought your first stock ten years ago. i got my first mortgage 40 years
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ago and i paid 6%. and inflation was higher. mortgages are a bargain today. >> so i should celebrate -- >> even if they go up what ken said, 25 basis points, it's nothing. >> even if they start selling mortgages later this year, ken, do you still think nothing dramatic would happen to the rate? a little further higher but nothing dramatic? >> yeah. i don't think they would start selling them unless the economy was really roaring, which i don't think anybody is calling for, and the housing market starts recovering, so i would put a very low probability on them selling mortgages but, certainly, if they were -- if they ever got to selling mortgages, mortgage rates would probably widen at least another 50 from there. >> but not the 17% of the early '80s? >> but going back to what bernanke said at the meeting on february 10th he said we're going to let those run off. they're going to mature. he's going to put his balance sheet back to more normal. i don't want to be among the
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three giants, i don't want to be the guy talking about fixed income. i just want to read the playbook and the playbook is fairly obvious. it's right here. five pages. >> jim, what's your view on mortgages? >> i think that mortgage rates are going to go up. let me take the question a little bit differently. if the fed is going to start raising rates and the yield curve is going to start flattening, right now something around 40% of all earnings are coming from the financial sector. one of the highest percentages we've ever seen. a lot of that is attributed to the very steep yield curve. if the fed starts flattening the yield curve financials aren't going to make as much money. all these asummings about $85 and $95 s&p earnings, a lot of that, maybe 40% is coming from financials as well. they'll get crimped down too. it will have a big effect on the stock market. the biggest driver of earnings right now in 2010 might be the steep yield curve. if the fed started raising rates, and that steep yield curve is going to start to flatten, then they're going to put a crimp on the biggest driver of corporate earnings that we have. >> let's go then, i have two things more i wanted to ask.
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let's go straight to this one which is where do you think the best place is to put your money right now. i know that jim and mario strongly disagree. i'll let them take a breath and start with ken. >> you know, in the bond market, which is where i focus, i think the five to ten-year corporate market is very attractive right now. mainly because the yield curve is very steep. the yield difference between a two year and a ten year for example right now is at historic wides about 180 basis points and you get another 180 basis points in the credit spread. so you get a lot of protection against rising rates. if the shortened of the yield curve rises because, increases because the fed starts tightening, actually the longer end, if it's to keep the economy going at a more moderate pace, actually the longer end of the market may like that. >> all right. so now let's go to you, mario. jim gave a scenario. it's fair. 40% comes from financials.
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they benefit from the yield curve. maybe not so great for stocks. are you worried about stocks overall? secondly i know there are two names you like. >> we're bottoms up stock pickers. every day we come to work. we look at companies. what are they reporting? what is a company worth? what's the intrinsic value? what's the catalyst? when we look at equities we're looking not at equities the way they look at fixed income. i mean, we're looking at stock specific, company specific. >> a little bit of a dig by the way, jim. >> i hope they heard it. >> they heard it. >> some of my best friends are fixed income guys. bill gross -- >> yeah, okay. what are your names? >> it's hard to distinguish between a five-year bond and a six-year bond. >> right. >> what we look at is what companies have something interesting going on and how do we structure portfolios based on that? how do we invest in equities? and what will happen to a particular stock? so when i look around the world, what's clear to me is everybody
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is -- there are 4.6 billion wireless phones in the world. one of the great growth markets in india, china, africa, central america, latin america. there's lots of love making going on, erin. lots of consolidations. for example you walk -- >> whoa. >> don't stop there. you woke up on tuesday morning and you saw a company based in india trying to buy a company that had kuwait for african assets. one of my picks that we're buying and recent newcomers to game is micc. there's a hundred odd million shares, owned by a company in sweden, and basically you've got a 25% growth over the next ten years. and somebody will try to take them on because they're yummy. >> the final word to you, jim, i guess he's talking about the population explosion in certain parts of the world. there is certainly a way to trade it. final word goes to you in terms of where you put money now. >> i'm worried that the fed is going to be too slow in pulling
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back all of its excess reserves and is going to create inflation. if you buy a tip, a five-year, ten-year tip you can get 1% real, 1% over whatever the eventual inflation rate is going to be. i think for portfolios that's going to be a very hard bogey to beat over the next couple of years. i'll take that without doing much work. >> you don't like what ken is talking about, buying a five or ten-year bond and locking in the rate then because you expect what the fed is doing is going to cause inflation? >> exactly. what ken has is great as long as the inflation scenario doesn't get out of hand. that's my biggest concern. until i get a sense that the fed has got this under control, look at the minutes. they don't have it under control. they're still arguing about what to do. they know they need to reduce the balance sheet. they just don't know how. that's a cocktail for inflation and why i'm worried. >> well, i do think that there is tremendous slack in the economy. you look forward, even the break even inflation and tips, tips versus nomnominals is pricing i lot more inflation than probably
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we'll be seeing over the next two to three years. tips have a negative carry versus nominals it seems like right now and probably aren't going to perform all that well. you're probably right, jim, five years out but in the next couple years i think there is tremendous slack and nominals will probably do better. >> thanks to all three of you. we appreciate it. three different views. something strange going on in certain parts of the world from you, but let's take a quick view on what's going on on the trading floors. mary thompson is at the big board. >> reporter: you know, we were weaker at the open. 're holding on to modest gains right now as we head toward the closing bell on this friday. it is going to be an up week for the dow, the s&p, and the nasdaq as it stands right now. let's take a look at the sector check. basically the markets have performed pretty well in the wake of that hike in the discount rate. the leaders today include utilities, helped in part by strong core earnings from pg&e. they've come off their best levels of the day. financials too not too much impacted by the discount rate
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hike. morgan stanley out with a note saying borrowing is from the fed's discount window down significantly from the fall of 2008 when they were about $110 billion, $14 billion at last count. they don't expect a big impact on the banks. industrials benefiting as well because if you look at the rate hike as a sign that the fed believes the economy may be improving or have turned a corner and put the worst behind it, industrials should benefit. also honeywell coming out and raising first quarter forecasts. that's helping that group as well. back to you. >> thanks very much, mary. next, the fed's rate hike was a secret. no matter what anyone says in many ways a surprise. so now this is the new normal. washington's most outspoken fed critic is up next. plus how the real america is dealing with the new normal. mayors from two cities on the opposite ends of the unemployment spectrum. : could so 15% or more on car insurance?e you host: did the waltons take way too long to say goodnight?
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the new normal may mean big changes at the institution that controls america's money. that of course is the fed. our latest survey from december at cnbc shows more than 30% of americans have little or no confidence in ben bernanke's federal reserve. are major changes in store for the fed that will affect how all of us live our lives literally? texas congressman ron paul is fighting for congressional oversight of the fed. and we have the author of "in fed we trust" and is the
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economics editor for "the wall street journal." go ahead to the uninitiated and please make the case for what is so wrong at the fed. >> first off, the fed was created in an unconstitutional method. you're supposed to have authority somewhere to establish a central bank. second, it's only an economic mischief that the fed creates. they created bubbles in the 1920s, depression in the 1930s. the business cycle all depends on the federal reserve creating bubbles and then the bubble has to correct itself. it's based on the theory there should be central economic planning. i happen to believe in the free market. it amazes me listening to business stations how easily they accept this notion that economic planning is okay and the fed is in charge of it. they just manipulate interest rates. they're going to raise the interest rates a quarter percent. banks are still getting their money free. yet when the little guy and the businessman, individuals go to the bank they can't get a loan. they either don't have the right collateral or they don't qualify and they can have bad collateral and dump all their bad assets on
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the fed. it's a wicked system, immoral, bad economics, not constitutional and at least even for those who disagree on what we should do, i have a large number of people in washington now. 317 cosponsors who say we at least ought to know what they're doing. who is getting the money? where the deals are. how do they bail out foreign countries? what kind of deals do they make with foreign countries and foreign central banks? they have this authority but we in the congress have no right to know what they're doing and i think that's wrong. >> all right. i'll follow up in a moment but first, david, obviously you were one of the most knowledgeable people about this institution in the world. what do you think about ron paul's point? the fed despite all the minutes that come out after every meeting where they supposedly tell us what went on is it still a black box institution as evidenced by what happened last night, they had a recent meeting and didn't do anything and then came out and surprised us last night with a rate hike? >> well, congressman paul has a very strong point of view and he's written a pretty interesting book called "end the
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fed" so you know where he wants to end up. >> we know where he stands, yes. >> i think that the fed has traditionally been too secretive for its own good. every time somebody asks them for information, they say, we can't give it to you because it'll harm the economy. then a couple years later they let the information out. and the economy doesn't come to an end. i think the fed does provide more information than mr. paul suggests and, frankly, i don't see how anybody was surprised by the discount rate move. you're absolutely right they were. ben bernanke said he was going to do it. they had the minutes of the meeting on wednesday and said they were going to do it and on thursday a whole bunch of people who don't read "the wall street journal" or listen to cnbc apparently said they're surprised. the question is why weren't they listening? >> why didn't they do it at a scheduled meeting? that is a fair question isn't it? sure everyone knows they're going to do it at some point but they like to keep us in the dark as to when. why is that helpful? >> i don't know why they didn't do it at a scheduled meeting but i don't think it's a big deal. i think the big deal and the thing mr. paul is saying which gets a lot of credibility with
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people is we have set up in this country like in every capitalist democracy an independent central bank that is not controlled by the elected leadership. and most of the elected leadership thinks that if they set interest rates the economy would be worse. and as a result, there's kind of antidemocratic mysterious thing off to the side. and that was okay when the economy was great. it doesn't look very good when we go through the worst crisis since the great depression. they have become a lightning rod for everybody's anger, everybody's sense that wall street got bailed out and main street didn't. >> ron paul -- >> can i answer that? >> go ahead. >> i don't think it was intentional but it was intended to discredit what i'm saying, but i don't want congress to set the interest rate. i want the market to set interest rates. i want the market rate of our cds, the people who save, i used to think savings was a good idea. people who are frugal and take care of themselves but today they get 1% or 2% on the cds and the market rate might be 8%.
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i don't want the congress to set the rates. there's a lot of difference in me saying well congress won. it would be a disaster. i don't like economic intervention. and we don't have capitalism. we have economic interventionism. we have crony capitalism. we do not have free markets at all. >> let me ask you your point of view, ron paul, on what david said when he said i don't think it's a big deal they did this intermeeting. i know people will make the argument it's not really a rate hike and they're trying to say it doesn't matter but isn't what they did last night evidence of what you are concerned about in terms of the lack of transparency? >> sure it is. to me that's rather minor compared to what i'm interested in. i want to find out the details about why a company like goldman sachs can come out well and lehman brothers doesn't come out so well. i want to know what they do internationally as well. i mean, like for instance i'd like to ask bernanke next week whether or not we were in the discussions to bail out greece.
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i can't for a minute think we weren't involved in that. if it involves extending a loan or a grant or being involved and putting pressure on our dollars indirectly, over time, the middle class in this country, the people suffer because they lose purchasing power. the people are behind -- wall street is doing great. they're making more profits now -- last year they're all up. but the average person is not as well off as they were ten years ago. >> right. >> this is because we believe we can bail out everybody. i think the system is very politicized because congress runs up the debt and they know the fed will be there to monetize the debt or the interest rates will skyrocket. >> a big concern now is the fed losing independence which would be your dream coming true, mr. paul. he says, he is concerned if they lose their independence that all of a sudden something unforeseen, unexpected happens, and the fed can't go and act because it has to go get approval from the gao under your plan. what is your response? >> no.
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that's completely wrong. i had no oversight for six months. there is no interference in the fomc. under these conditions, nothing would change other than the fact that they would know that one day not in the too distant future we'll know what they're doing. that's an absolute misinterpretation of what i'm talking about. >> final word, david, to the question. >> i think there is a risk not necessarily because of ron paul that the fed will not have as much freedom to respond to a financial fire next time but i believe in the end the politicians don't want that to happen and they'll make a lot of noise and they might change the way banks are regulated. in the end they're afraid of taking responsibility for the crisis and want the fed to get the blame to give them the freedom to fight the fire. >> thanks very much. appreciate your time. just ahead on the show what does the new normal look like from outside any window in america? from the housing market to the job market it all depends on where you live. we'll head to two places with two completely different views on where america stands right now, next.
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we've been talking a lot today about what is the new normal. it's the focus of our hour. you've heard our experts say a new normal means higher unemployment and slower growth. that sounds bad. but america is a big country full of extremes. take a look at this map. you got fargo, north dakota where unemployment is among the lowest in the nation and at about 4%. compare this to chillicothe, ohio, which has a 12% unemployment rate. obviously well above the national average. here with more now on what this new normal means, the mayors of fargo, north dakota, along with the mayor of chillicothe, ohio, where president obama held a town hall on jobs just last month and of course mayor salzer was with us that day. thanks so much to both of you. i'm a glass half full kind of person. you both may have that. let me start with you in fargo. with the 4% unemployment rate people may look and say, well, gosh. we hear mohammed and by his math you have a better rate than anyone deserves in this country and things must be great. the new normal must be good for
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you. is it? >> well, first of all, you have to understand what north dakota is all about. we're an extremely conservative state. if you have job skills you can certainly apply. doesn't mean you should pick up and move to fargo, north dakota and expect a job immediately. you need certain skills and so forth. 4% is probably higher than we've been in several years so it's good here. for my own employees, 700 employees that work for the city of fargo, we did not provide a cost of living increase in the year 2010. >> you still don't have the wage growth obviously which is another part of the new normal. what about you, mayor? i know we've talked a couple times now but how do you see that 12% rate? is that normal? is that what you expect to be facing for the foreseeable future? >> no. certainly not a normal figure that we are accustomed to dealing with in our community.
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even throughout southern ohio, though we have ripecognized ove the past several years the unemployment rate we do experience is a little higher than what we would see on a national level even beyond, well beyond our expectations of what we'd like to see. >> so what do we need to do from here? i don't know how much of the program that you've heard, we've been talking about how america doesn't trust the fed and have had a lot of experts say the truth is we're going to have high unemployment and slow growth for years and years beyond this point. >> well, basically while we continue to be successful in north dakota, we have a diversified economy. we produce energy. we produce food. both of those have not suffered the ill effects of unemployment. we're not dependent on any one industry and so forth. and that's the secret to our success. >> mayor, what do you need from here? if someone were to say i'll give
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you whatever that magic thing is to help your unemployment rate, to help you be able to increase wages, for people in your town, what would that be? >> i think it's the same standard we have followed for years. it's not relying basically on the federal or state governments to assist us. it's our own actions as a local community reaching out into the jobs market, meeting with business owners, encouraging them to come to our community. and first and foremost we also recognize the importance of retaining the jobs that we have within our community even though we may be in a downturn right now. we fully expect that the optimism that exists within our community, even among the business community, for the year 2010 and beyond, will in fact take hold and we will in fact see a decline in the unemployment rate. >> that's the optimism everyone wants to hear. final word to you, mayor, you said you didn't give a cost of living increase to 700 city employees last year. wallace going to determine if
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they get one this year? >> it all depends upon our budget mid term. if our mid-term budget is good because of some variables in the process of our creating our revenue stream for 2010, until those things get resolved, we will probably do a mid term if there is money available. if not they have to wait until 2011. we do not have any process -- everybody kept their job. there was no layoffs. we continued to hire or replace employees. >> all right. mayors, thanks so much for taking time out of your afternoon. a good weekend to you. >> thank you. you too. >> thank you. next on the show we'll get traders' view of the fed's latest move and how the new normal is shaping up from the floors. wow do they have creative ideas. one is the proud owner of this beautiful creature chowder the "street signs" mascot. jim cramer said chowder should have won the dog show. the mystery trader revealed.
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welcome back to "street signs." of course everybody is trying to decipher exactly what the fallout of the normalization
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yesterday of the discount rate and of course the cynical bunch, they are one of the traders this morning, said, hey, if i owed you a million dollars and said i'd start paying you next week and gave you $2 that's about the size of it. step in the right direction doesn't make a lot of difference. but it is a step in the right direction. next week the big story is going to be supply, supply, supply. $54 billion in three and six-month bills. $118 billion of twos, fives, sevens not to mention whatever the four-week bill is and that will be announced early in the week as a drive by as it usually is. the dollar index is up on the day but well, well, well off its highs. erin, back to you. >> thanks very much. now the new normal from the trading floors. our traders are going to get very creative. first we have some business to take care of. which dog do you think won, jim, best in show? sadie is the black one and chowder is the name of the seal body one. >> i'll be with chowder head. >> chowder head, right?
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well, jim picked the better dog but the better dog doesn't always win. could be either one of you the way you're reacting. >> you want me to start first? the doberman should have won. i don't even know why -- really, the doberman was stunningly beautiful. >> chowder is the mascot dog of "street signs" and the proud owner of chowder is david lutz. david? there you go. a weird looking dog but we like her. is it a boy or a girl? chowed ear boy name or girl name? >> he's a boy, a rescue dog, you know, and my kids named him. we absolutely love him even though he is seal shaped, has freakish little feet and i'll tell you every move he makes he articulates very well coming out of his snout. >> he does. thank goodness he looks nothing like his human father. all right. thanks so much. >> thank you. >> so let's get to your creative trades. i want to start with the optimistic side of things. so, david lutz, i know you were forced to get creative. you are looking at drug trades
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in west africa and there is a way to trade that? >> absolutely. well, erin, you know what? everything that's going on in nyjer right now everyone is talking about uraniuim which they absolutely should but at the end of the day one thing that's kind of interesting is that the u.n.'s drug czar said on monday that a lot of the cocaine being shipped to west africa by latin american drug cartels is being traded for arms. the reason they're shipping it to these countries is because they're obviously unstable and they're moving to europe. a lot of the people now involved in this arms trade are cells of al qaeda terrorist groups. that is a big development. that's something i think is going to bring our department of defense into play. we're not going to interfere with nyjer's political standpoint but you know what? i bet we'll start watching what these guys are doing. and two stocks that are buy rated here, argonne and applied signal, both of those focus on surveillance and wiretapping. and you know what? funding for surveillance and wiretapping is one of the areas that is absolutely outgrowing the normal defense budget right
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now. >> peter costa, you have to give david lutz credit for going all the way to nyjer to find a stock he thinks is going to go up. does he convince even a sad bear like you? >> if you're going to have the nyjer dollar trade or the carry trade from nyjer that might be a play but i, right now, i'm looking, you know, that's -- where david got that one, god bless him he can pull that stuff out but being a lowell trader i'm -- a lowly trader on the floor i'm looking at interest rates. i think they'll start perking up probably around the august/september time. i think you'll start seeing that. so i mean my play for that would be, you know, getting into something a little more interest rate sensitive so, you know, i'm not going to nyjer though. that's way too complicated for me. >> he picks u.s. companies that deal with surveillance. >> actually a very good play. >> speaking of nyjer there is another angle.
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i bet you -- i didn't know this but nyjer is one of the top three or four, maybe fifth in the worst case scenario producers of uraniuim. we know everyone wants uraniuim not just ahmadinejad but us for the new plants we're building. so issues in nyjer actually could dramatically impact some uraniuim stocks. >> who wants to take that one? >> absolutely. it's going to impact some stocks. right now canadian mining companies have emerged as the biggest winner in the wake of nyjer going ahead and breaking up the traditional french monopoly. there's two canadian companies, one that's listed in new york called ccj. they are the world's largest uraniuim producer and one of the leading canadian investors in nyjer because of gold, gold mining is picking up drastically in nyjer and picking up a lot faster than uraniuim. those are a couple companies to
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keep an eye on. one note. all of these companies thus far have not been affected by the disruptions. i think this is business as usual believe it or not. >> all right. well, thanks to both of you. we'll give those our new normal trades. you got a cold dose of reality from peter costa and a real dose of creativity from david lutz. that's what the new normal will be all about. next a record number of mortgages are in trouble. there is a bright side though to that. and we have it. so many arthritis pain relievers --
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welcome back to "street signs" with your daily realty check. i'm diana olick in washington. a record 15% of all u.s. loans are in trouble but there is a bright side. the number of borrowers missing payments for the first time or 30 days' delinquent dropped. this is the first real sign that the foreclosure crisis may be easing. president obama $1.5 billion in funding for state hughes agencies in the five states hardest hit by foreclosures. the money aimed in part at unemployed borriers will come
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from t.a.r.p. and could go down to write-down mortgage principles. and fortress investment company may have to cough up $150 million to keep the olympic west out of bankruptcy. creditors postponed auctioning the site during the winter games. check back with the realty check, next monday morning 11:15 until then go to the blog. >> thank you, diana. and next, tiegser's sorry statement. was it enough to repair the damage done? and what does the pga think of it? at td ameritrade are a demanding bunch. in fact, they want it all. you know, when i place an order, don't just fill it. get me the best available price. a better price means more money in my pocket. that's why td ameritrade's proprietary order routing technology consistently seeks the best available price. i've got quotes, charts, watch lists. just the way i want them. mission control? right here. command center 2.0 lets you customize your trading space.
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the long-awaited mea culpa finally happened. tiger said he's sorry so now what? brian shktman has that part of the story. brian. >> reporter: it's interesting, erin, the people i talked to in the room he said had a much stronger presence than expected, much more emotion than expected especially for a highly scripted and controlled environment. he was somber. he was contrite. he apologized to everyone, including his sponsors and
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especially elin. i want to share quickly just a few items about what went on. there were about 40, 45 people in the room. he talked about 13 1/2 minutes, longer than expect happened. he's been in a rehab for 45 days and he's going back tomorrow but truth is a lot of people want to know when he's going to go back to the golf course. >> i do plan to return to golf one day. i just don't know when that day will be. i don't rule out that it will be this year. when i do return, i need to make my behavior more respectful of the game. >> reporter: from the sound of it it could be later rather than sooner. here's what pga commissioner tim finchem had to say. >> and i think it's important that he come back at a time when he's dealing with issues that he feels he needs to deal with on that time frame because i think what people are want is for him to come back and play well and they also want them to come back with comportment and have his
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act together in a very positive way. >> reporter: now april 8th is the masters. if he were to play in that he would have to play once or twice before that, it kind of sounds like maybes that off of the table and if it is that is going to hurt, because erin, it's been his life goal to beat jack nicklaus' major. definitely thaurts goal so he would be much more sincere in the ice of many people here if he did skip the masters. >> thanks very much to you, brian shactman. u.s. skiing team lindsey vonn is not the only one getting the attention. her teammate now getting somewhat the spotlight. darren rovell is live in vancouver with that story, mr. rophel. >> reporter: her name is julia mancuso. she's certainly been overshadowed by her teammate lindsey vonn heading into the game. she came second to vonn in the woman's downhill earlier this week but when lindsey wiped out on the super-combined. the three medals makes her the most decorated female alpine
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skier, her sponsors -- nike, visa, 24-hour fitness and audi, are now doubt thrilled that they can use the theme to sell her "kiss my tiara lingerie" a troerchts fact that she wears a tiara on the podium. now mancuso is selling that she will take part of the super-g tomorrow and then her giant slalom olympic title will be defended next week. guys, back to you. >> thank you very much. i have not seen that logo before. thanks very much to darren, who will be continuing to cover the money side of the olympics from vancouver, we'll have a final check the markets and we're awaiting momentarily from the president from las vegas with the commerce. but first your "trend of the day." national car rental knows i'm picky.
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all right you are look at harry reid speakingalt the chamber of commerce in las vegas. obviously, that's the state that the president has appeared before him stumping for him and he's going to make a speech on the economy in just a couple of moments. mr. reid is continuing the
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introduction. right now we are going to hand it off to the "closing bell." and there's a live picture of the floor of the new york stock exchange. resilienceo wall street today. stocks extending gains for a fourth day in a row. investors are finding some good moves in the fed's move to raise that discount rate yesterday. hi, everybody, welcome to the "closing bell." i'm sfwhoourts good afternoon, i'm simon hobbs. we are keeping an eye on events in las vegas where the president of the united states is about to speak to the chamber of commerce there, harry reid's still doing the introduction. in the meantime, let me just show you where we're trading at the moment. we actually crossed into positive territory for the year earlier today. 10438, that's ten points above the december 31 close. but as you can see we have dropped back down. on the nasdaq, clearly, one of the main focuses is of the earnings that we had last night on the program from dell. we will talk about t


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